Mining industry weary of demands

THE mining industry has called for the end of the cargo cult mentality that led to BHP Billiton paying out about $900 million to meet 1100 conditions imposed on its Caval Ridge coal mine in central Queensland.

The cost of doing business in Queensland is one of the highest priorities for the mining industry which has sacked about 5000 workers this year with another 108 going this week from Sumitomo and Vale’s Isaac Plains coal mine in central Queensland.

But Queensland Resources Council chief executive Michael Roche said the job losses and cost cutting appear to be over for now with a slight rebound in prices for coal and volumes picking up to levels not seen since July last year.

Mr Roche said cost blowouts were often caused by government agencies making demands on projects that were nothing to do with the mine’s impact.

“It got to the stage when a project landed in the Co-ordinator-General’s office the social impact people would call all the agencies and local government to see what they would like the project to contribute to enhance social infrastructure.

“The message from me is those days of a cargo cult where a new project can spend hundreds of millions of dollars of costs for impacts that are nothing to do with it are over.”

Just as Mr Roche was calling an end to the imposition Deputy Premier Jeff Seeney announced another $90 million of infrastructure for Moranbah through the BMA Caval Ridge social impact management plan.

“As the State Government proceeds with its ambitious agenda aimed at getting Queensland back on track, we want to ensure that people reap the rewards from major projects – not just the economic benefits but also through a range of social and community programs,” Mr Seeney said.

The package included $46 million towards the Moranbah Airport upgrade, $19.6 million for local infrastructure support for water, road and airport maintenance, $5 million over five years towards affordable accommodation, up to $5.5 million towards a Regional Youth and Community Services Centre and $2.8 million in programs such as day care.

Central Highlands Mayor Peter McGuire said calling it a cargo cult mentality was “well off the mark”. He said the council had a good relationship with big companies such as Rio Tinto and BHP Billiton’s joint venture, BMA.

Coal mines sue union for $2.4m

QUEENSLAND’S most powerful mining union is being sued by nine central Queensland coal mines for almost $2.4 million.

The Construction Forestry, Mining and Energy Union’s mining and energy division is facing allegations from BHP Billiton Mitsubishi Alliance that one of its safety representatives abused his post, illegally forcing the mines to halt operations.

BMA claimed the stoppage on February 22, 2010, lasted between six and eight hours at its mines, costing it hundreds of thousands of dollars in lost wages and coal sales.

For Moranbah’s Goonyella Riverside, BMA believes the work shutdown cost more than $144,000 in wages alone.

In documents submitted to the Federal Court in December, BMA alleged CFMEU Industry Safety and Health representative Tim Whyte unlawfully shut down the mines believing a new fatigue plan from BMA was unsafe for its workers.

According to its claim, mine executives and the Queensland Government’s Chief Inspector of Mines asked Mr Whyte to withdraw the orders, but BMA believes those were dismissed.

The documents indicate the chief inspector eventually cancelled the orders himself.

Because BMA’s case includes claims the union’s divisional president Stephen Smyth endorsed the shutdown, Mr Whyte and Mr Smyth are also subject to the case as individuals.

Safety representatives are endowed by the Coal Mining Safety and Health Act with the power to immediately stop work for a “safety and health purpose”.

BHP ditches another three coal projects

BHP Billiton (ASX, LON, NYSE:BHP) has added three new names to its growing list of shelved coal mine projects as defers its Red Hill and Saraji East coal projects, reports Mining Australia.

The miner has also stopped research into its underground coking coal mine near Moranbah, where it had planned to mine 14 million tonnes of coal annually.

The project was expected to cost the company more than $3 billion, given average industry project costs.

BHP blamed falling coal prices and weaker Chinese growth expectations for this decision, which follows the cancellation of plans to expand its Olympic Dam copper and gold mine in South Australia, as well as its Port Hedland iron ore harbour expansion in Western Australia.

On Monday, fellow miner Rio Tinto (ASX, LON:RIO) also announced more job cuts across its coal mines in Queensland as the state has raised its royalty rates and the commodity’s price continues to fall.

BHP suspends plan to build Red Hill coal mine in Queensland

BHP Billiton Ltd. has halted plans to build a coal mine (Red Hill) near Moranbah in Queensland, Australia, which was to produce 14 million tons of coal annually, The Australian reported online.

“The company is focused on the projects currently under execution,” a BHP spokesman told the newspaper on Wednesday. “In response to the challenging external environment, we have made some changes to the growth project arrangements.”

The mining giant has reportedly suspended studies on the Saraji East project, also expected to produce 14 million tons of coal a year, but BHP wouldn’t confirm the news, according to the newspaper.

Pilbara iron ore rail battle heats up

Fortescue has won its High Court appeal over access to Rio Tinto and BHP’s iron ore rail networks in the Pilbara.

The Australian iron ore miner had been fighting for access to Rio’s Hammersly and Robe River lines, as well as BHP’s Goldsworthy and Mount Newman networks.

In 2010 the long running battle came to a head when the Australian Competition Tribunal rejected Fortescue’s push for access to BHP and Rio rail networks, and allowed the two major miners to retain full access to their own Pilbara rail lines.

The Tribunal rejected the application by Fortescue Metals and a group of junior miners to gain access to the rail lines, finding that access by these miners to Rio’s Hammersley lines and BHP’s Newman rails “would be contrary to the public interest.”

The Tribunal’s inquiry found that the actual costs in providing access had the potential of dwarfing whatever benefits might exist from avoiding duplication of lines.

However, despite this the Tribunal did find in favour of the applicants for access in regards Rio’s Robe River railway and BHP’s Goldsworthy line.

Fortecue continued in its fight to gain full access to the Pilbara network, and was granted a High Court appeal late last year.

In its appeal FMG made technical arguments about the court’s interpretation of the law.

The High Court has now found that the Tribunal’s decision was not legal, according to the ABC.

This has now allowed Fortescue to again pursue access to the Pilbara rail lines.

Graham Short, from AMEC, explained there is still some way to go before a decision on access is reached.

“There’s obviously still further negotiations to be conducted and, as I understand it, it would still need to go through various tests so that it would be considered by the Australian Competition Tribunal.”

Rio Tinto came out against the decision, however it did note that it was “pleased to note that the High Court accepted its formulation of the proper test for the threshold question of whether a facility can be economically duplicated.

“The Minister and the Tribunal both applied the wrong test in determining this threshold issue, and the Tribunal will be bound to adopt the test Rio Tinto argued for on any reconsideration.”
Rio went on to add that its “integrated operations in the Pilbara would be severely impacted if third parties were permitted to run trains on the system. As the Tribunal noted, the potential disruption and diseconomy costs would dwarf whatever benefits might exist in permitting third party access”.

BHP Billiton – Jimblebar $4 billion contract

Just in case anyone thinks BHP Billiton has given up on mining altogether, it has just handed a major construction contract to engineering firm Monadelphous for its $4 billion Jimblebar iron ore mine in WA. Construction work is scheduled to start next month. The Resources Revolution continues …


Anglo American to cut Moranbah North jobs

Anglo American will cut at least 50 jobs when its Moranbah North mine reverts back to a single longwall operation.

It comes on the back of a rash of coal mining job cuts across the Bowen Basin.

Earlier this month BMA, Rio Tinto, and Xstrata all announced they will be reducing their workforce.

BMA recently cut 100 employees from the contractor workforce at its Gregory Crinum coal mine in Queensland.

It has also halted expansion works at its Peak Downs coal mine.

Rio Tinto has cut 70 contractors from its Kestrel-KME operation, as well as slashing positions at its Clermont mine and closing its Blair Athol operation; Xstrata will be cutting contractor numbers on its coal mines but refused to detail how many workers would go or which sites would be impacted.

BHP CEO Marius Kloppers this week said it was part of a “broad industry movement” toward cutting jobs on Queensland coal developments.

Now Anglo American has joined the other major with its announcement it will cut positions, the Daily Mercury reports.

It comes as the mine reduces its operations from two down to a single longwall.

Due to this it will reduce its workforce, and has called on some workers to take voluntary redundancy.

An Anglo spokesperson told the Daily Mercury the decision was made “in light of recent market conditions and declining coal prices”.

“This … will reduce workforce and contractor activity across the mine,” she said.

“We are currently conducting a review of business requirements for the new operating environment.

“As a result of the operational changes, Moranbah North mine announced a voluntary separation process in which we have invited employees to register a non-binding expression of interest if, based on their personal circumstances, they would like to leave the business,” she said.

The CFMEU slammed the shrinking coal operations across the Bowen, stating that companies are cutting jobs because commodity prices have slumped.

[Anglo is] going to reduce operations from two longwalls to one longwall,” Smyth explained.

“That’s up to 50 jobs as a minimum. It could be more. They are not entirely sure because they are reviewing operations.”

There is no word yet as to how this will affect Anglo’s planned development of the Moranbah South and Grosvenor projects.